Thread: Part timers - break even point.

I read about every post on here in the last 6 months ,and have read a bunch about knowing your costs to determine how much profit (and hourly rate) you are making. So my question is: how much is your monthly ,weekly ,daily (however you want to break it down) costs. If you are a part timer like myself are your costs less therefore your hourly rate profit higher than someone full time ,or does it matter? If you are a one man show it seems to me your hourly profit would be higher ,but I'm only in my first year so what do I know. I think it's good advice to break it down so you know what you're really making. If you have to go out and buy everything , I mean truck ,trailer ,mowers ,trimmers ,blowers etc. it would take longer to break even , but if you are a part timer or I guess even if you are a full timer one big expense might already be covered (your truck). So what all do you figure in to get your break even point or does it really matter as long as you have a positive cash flow?

It isn't Rocket science Smitty, add up your gross revenue, subtract expenses(fuel, insurance[auto, unemployment, workers comp, etc], equipment, supplies, materials, employee wages), and the difference is profit. Then divide that by whatever time frame you chose as your source of reference, how many hours you put in each day INCLUDING drive time, per week, per month, etc... Just make sure your calculations for for income and expenses are just for that period of time. Just basic middle school algebra.

If you pay for a yellow pages ad once a year, and you are calculating weekly or monthly, you need to make sure the total price is divided into the proper reference point(52 weeks a year, 12 months a year).

If you are renting, making payments on a truck/trailer/equipment, the profit margin drops, but once it is paid for it becomes an asset, subject to depreciation, maintenance, whatnot.
This is why a lot of low-ballers don't make it after a few seasons, they fail to calculate the necessary costs to remain in business after their equipment fails, or they manage poorly and don't keep a reserve held back to recover from a disaster. There's some good software out there that can help you calculate this. I tried CLIP at one point, using their freeware sample, but found it a bit over intensive and complicated for my tastes. I personally use QUICKEN 99 as my accounting program, and it works well for me.

Smitty,
What's the real quesiton you want to know? Buyin tools and stuff and trying to figure a break even point is of no use to anyone. If you want go in business, you buy the stuff to do the job. As you make money you buy what will do more and make the job easier. There must be a reason for you asking your question, what is it??? THEN....... we can help you. I'm solo and been doing this part time for almost 20 years..............What do you really want to know/???
Pete

One other consideration is your actual versus your anticipated. Even if you work out of your home and have lower overhead, consider costs into your pricing as if you were operating as a full time business with rent/overhead, etc.

Your break even point may actually be lower per hour when you're smaller depending on how your accunting for your costs. To make sure you don't leave money on the table run the numbers as if you were a larger company - similar to you competitors. Just because you can charge $20 per hour doesn't mean you should if you can get $30.00 per hour.

You should be able to put a few more dollars in your pocket when you're smaller. If you decide to step it up a notch and add employees and equipment, etc. then you'll be in a better position since you're pricing is in line and you'll have a little more in the bank to self finance your growth.

I guess my real question is ,how much do part timers make per hour (net). I know how to figure it I'm just curious what others are really doing. A lot of people brag about how many lawns they do in a day and how much they are making per hour. I find some of these hard to believe.

Lawnlad - I like what you said about leaving money on the table ,and have already made that rookie mistake in an attempt to get work.

I currently have 6 accounts that pay $130 total (I know some of my accounts are slightly underpriced ,again rookie mistake) ,and if I do all 6 in one day it takes me 6 hours from the time I leave my house until I get back. So I'm not doing as good as some of you say you are. I hope next year to increase my net ,but even if I weren't leaving money on the table I could only increase this to $150 - $160. So my GROSS hourly would still only be $25 per hour. So either some people are using very fast big mowers on very small yards ,or they are stretching the truth. Of my 6 four of my accounts are together so there is no travel time ,and the other 2 are 2 miles from the 4. I realize I'm just starting out but I'm using good equipment ,and my my travel is very minimum. The other possible reason is I take my time making sure all my accounts are done as good as possible. I'm not looking for an argument just honest answers to help all of us part timers out. If we are to believe what some have said they are doing ,unless we are making $50 per hour we must be scrubs.

smitty, 6 accounts, 6 hrs? and 4 of them are together? damn boy, in only a few short months you will be broke! the hardest thing to figure when breaking down costs is equipment/truck life, or depreciation. i have done this using an average, it works out pretty close to the actual. i do my costs on a 34 week work year.you are never going to figure how much per hr u r making on the whole operation, there are too many variables, and work that pops up unscheduled. an example may be when u r at a clients cutting the grass, and they come out and ask you to trim the two large limbs hanging by the house. u just happen to have a ladder and chainsaw with you, u decide to do it right then and there, and u charge $150 for an hours worth of work, u get what im saying, there are too many variables. u can however figure out how much an hour u will make when u have an established grass route, and u r just sticking to that route.

One thing that you do when you grow your business is to add new customers that are better than your existing ones and to weed out those that are not a good fit for your business, either due to relationship, geography or low profit.

I would recommend adding a few more clients at a price that you know you're making the money you want/need to make and then drop one or two that aren't as profitable.

This will help you to raise your hourly revenue. If I were setting a goal for myself I would shoot for $50.00 an hour minimum during production time. All the non-billable time you put into your business like book work, equipment maintenance, advertising (deliverying flyers, etc.) would not go into your equation, this is sweat equity.

To figure your billable hourly rate, I think you should figure travel time into the job. Take a 10 hour day and figure you want to make $500.00 for your labor. Materials are extra. If you have lawns that will take you 8 hours to cut with two hours of travel, you need to get back $62.50 per hour of actual billable time. This will cover your travel time. If you can cut a lawn in 30 minutes then figure $30 or $35 to cut it. If you can get two or three right next to each other you might be able to get your rate up to $60 to $80 per hour. The less you travel while bidding at the rate that recovers your travel time the more you'll make.

You can increase your revenue by adding more working hours - over the weekend or on available evenings. Once you've maxed out your available hours to work on the side then you can look to increase efficiency (buy more efficient/bigger equipment) to squeeze in more work. But you need to have a core book of business that can support that kind of investment before you run out and spend all those dollars. Keep your expenses as low as possible at all times only spending money on those things that will give you direct return on your business. It's called ROI (return on investment).

For now, get a few more customers and focus on making each one as profitable as possible. Only take work that will be profitable. Try not to take work just because it will keep you busy, you'll just spin your wheels longer.

Bobbygedd - go broke in a few short months? Since this is a part time thing ,and I don't need it to pay the bills I count it all as extra. That being said I don't want to give up my free time for nothing ,but going broke is a different matter. If I use your example of a 34 cut schedule at my current $130 then divide it by my current 6 hour time that breaks down to $21.67 per hour gross. That's not bad ,but still no where near where I want to be. I realize there are too many variables to get an exact hourly rate ,but it seems to me if a person was very organized they could keep track of how many hours in a week were spent working (billable or non-billable ,it's all work) ,and how much money came in.

LawnLad - sounds like you've been at this a while. Thanks for the advice. I do have 1 account that is a pain ,it was my first account and I priced it too low. The yard has a fence ,swingset ,shed ,2 large dogs ,and for the entire time I've been cutting it they have had those stupid white flags around the yard for the invisible fence. This is one I'll either drop or raise their price. It takes me 1 hour to do that one for $20. I know that's too cheap ,and even the homeowner made a comment once about that being too cheap ,but around here those size yards (7k sq. ft.) don't bring a whole lot more than that. After my first 5 months into this I'm already dreaming of a ZTR ,but since this is only a part time gig and most of the yards in my area are in the 7-15k range ,would it pay me to buy one?

Thanks to all for the comments ,hopefully someone else can gain some knowledge from this as well. I have learned a lot from reading the posts other people put in.

Switchless@aol.com
Im not sure what you meant by that post. I went back and read your first reply ,it did not say read your email and call so what's up? I would love to learn from a 20 yr vet like yourself. I don't have access to my email right now so if you could send me a private message that would be great.
Thanks,
Steve